30 December 2011

If you're into giving and tax deductibility and American, tomorrow is your last day (if you're not American or into giving - New Year resolution to save some lives?). I would highly recommend taking a look at Givewell's recommendations - hours of serious research into making your money go the furthest.

29 December 2011

Is apparently a real thing. My mum just turned on BBC Radio 4 to a set of listeners calling in with questions that they would like to try and answer with an experiment - does windy weather make kids act up at school - do cows really lie down just before it starts to rain - and a panel discussing the practicalities of possible experimental design.

27 December 2011

The most emblematic quote on the necessity of migration, viewed as a constrained choice, was given by a group of young boys from non-migrant families, who considered themselves lucky (and rich) enough never to have to migrate themselves:

“Those people who go to Russia do not go on a whim, but out of despair, from a bad life. They are willing, for the future of their children, to endure many hardships. They have no other choice.”

From a report just published by UNICEF (and prepared by OPM). Like sweatshop labour, many on the left seem to see migration driven by desperation as a problem. When clearly it is that desperation due to poverty that is the problem, and uncomfortable symptoms such as poor quality jobs and migration are actually generally alleviating the problem (not that more shouldn't be done to address poverty directly).

22 December 2011

Duncan Green is offering a small bet that the charter city in Honduras won't work. Here's the thing, sometimes its worth making the bet even if the odds are stacked against you, because you also have to take into account the payoff to success. An economist would call this expected value. Even if there is only one card in the deck that can complete my hand, and I am very likely to lose the round, I should still call a £5 raise if there is £500 in the pot that I could win.

Even if the odds of a Charter City taking off in Honduras are 1 in a thousand, its still worth a punt if the payoff could run into the billions.

So what odds do you say Duncan? I'll give you £10 if it fails and you give me a £1000 if it works?

Edit: Andrew reminds me about opportunity costs. If I only have £6 left then it would be silly to call a £5 raise on such long odds. The opportunity cost is playing the next round, where I might have better odds of winning a smaller amount. But if I have £500, then I can afford to take a smart £5 gamble with low odds of winning. So its a question of the overall budget constraints too. I'm not convinced that there are huge opportunity costs associated with the needed investment in a Honduran Charter City, relative to overall government expenditure (the idea is to encourage private investment for most of the construction).

18 December 2011

Hitchens is a devotee of Orwell; some have suspected a self-conscious desire to emulate him, right down to the jacket photographs with accompanying cigarette. Yet many admirers of Orwell admit to a stab of envy: he was lucky to be writing in such epic times, they moan, reporting on the titanic struggles of the twentieth century; if only we were blessed with such material, we too could reach those heights. By this light, reporting on Cyprus in the 1970s was all very well, but Guernica it was not.

And then along come the September 11 attacks and suddenly there is a subject worthy of these would-be Orwells’ talents. Why squander such a moment with on-the-one-hand-on-the-other equivocations? Better, surely, to light another cigarette, reach for the Remington portable, and fire off a thousand words of antifascist denunciation in the spirit of Eric Blair.

14 December 2011

88 % of all surveyed employers stated that they had job vacancies between July 2010 and July 2011, out of which 37 % did not succeed to fill all of these jobs. Out of these, one in four tried to hire workers from abroad, but only about half succeeded. In particular large enterprises with 500 and more employees hired workers from abroad. In most cases, these foreign workers came from the European Union or the European Free Trade Area, but about half of the employers did also or exclusively recruit staff from third countries.

Almost half of the employers with unfilled vacancies stated that they did not even consider this option. They explained this often by saying that they lack knowledge about the administrative procedure. Small and medium-sized enterprises perceived this obstacle more strongly than large employers. Furthermore, employers frequently stated to have been discouraged by the complexity of the procedure. Finally, many employers expected prospective labour migrants to lack German language skills.

From a new OECD survey, and one of the reasons why the eurozone is not an optimal currency area.

13 December 2011

‘if the reallocation of jobs across sectors, and increasingly countries is happening quicker and quicker, due to the exponential growth of technological innovation – then at some point are the productivity gains outweighed by the social damage they do?’

Moussa Haddad, quoted by Duncan Green in an interesting discussion of the new World Development Report on jobs. I'm inclined to think that Duncan is mostly wrong, but in an interesting way. I think he underestimates the insider-outsider problem with labour unions in many developing countries, possibly because of the same rose-tinted view of the history of labour in Britain, which I also succumb to. To be a British leftwinger means to be on the side of unions. But its pretty hard to reconcile the rosy view with the destructive role that teachers unions play in education in India.

He continues...

the team is 100% economists. Don’t get me wrong, some of my best friends are economists (really) and they obviously have to be central to any discussion about jobs. But where are the anthropologists to discuss the deeper cultural and social meaning of work

At which point my eyes glaze over. But don't get me wrong, some of my best friends are anthropologists....

11 December 2011

So according to this account from the Economist, it seems that Cameron may just have embarrassed himself this week(via: Chuku Umunna).

Still, the diplomatic mess aside, there is at least a silver lining for the economics profession, in correctly predicting the whole Euro mess. In Tyler's words,

The euro crisis is now here, and it seems our profession should win some of its status back.

The problem is fairly simple. For a stable currency union, you need some way of rebalancing economies running at different speeds. In the US, you have large federal transfers between the individual states, and also large-scale movement of people between states. So if Michigan goes down the tank, it gets subsidised by New York, and its citizens can easily move to another state with more jobs. The eurozone has no such automatic, built-in, large transfers between states, and much bigger language and cultural barriers to large scale movement than within the US.

So to some extent the last 10 years of euro success have been defying some fundamental economic laws of gravity. The latest debacle is basically irrelevant if it doesn't tackle these issues (Gideon Rachman at the FT agrees).

I am no euroskeptic. I love Europe, Europeans, and the convenience of the Euro. And I generally have very little time for the British Prime Minister and the lunatic fringes of his party. But given that Britain is not in the eurozone, I don't really see that trying to make this bold experiment in defying the basics of macroeconomic theory work is much of our business.

06 December 2011

Economists essentially have a sophisticated lack of understanding of economics, especially macroeconomics. I know it sounds ridiculous. But the reason why I tell people they should study economics is not so they’ll know something at the end—because I don’t think we know much—but because we’re good at thinking. Economics teaches you to think things through. What you see a lot of times in economics is disdain for other’s lack of thinking. You have to think about the ramifications of policies in the short run, the medium run, and the long run. Economists think they’re good at doing that, but they’re good at doing that in the sense that they can write down a model that will help them think about it—not in terms of empirically knowing what the answers are.

This is why I so instinctively trust economists. Even if I disagree with them or think they are too right-wing, they can usually be relied upon to have thought things through.

02 December 2011

In the spring of 2002 a senior civil servant at the Foreign Office asked Oxford university if Saif could take a master's degree course. "It was made clear … that the FCO would appreciate help in this case since Libya was opening up to the West again." The head of Oxford's department of international development told the FCO that the application would be "unlikely to prosper … because Saif had no social science training, and his prior degree did not meet the requisite quality standard".

29 November 2011

And now for some balance, some amateur anthropologising about America.

"This feeling of embarrassment, this shyness, this bashfulness, if you take that out of the people, then these people will do whatever they want to do. And that is the very definition of America, a people who have no shame, and therefore they do, whatever, they want, to do."

the middle class defined in relative terms does matter, precisely because they are the middle—the swing vote. It isn’t that they are especially worthy, more that they are essentially in between. If they make up the 60 percent between the bottom thirty and the top ten, which side they back is going to be important. So if we want to design policies that get implemented, we will want to consider them. That is, for example, a reason to consider transfer mechanisms that target the bottom 60 percent rather than the bottom 20 percent. Depending on country circumstances, it might make the transfer more politically attractive even while dramatically increasing its cost and reducing targeting efficiency. But that is a matter of the middle class’s statistical strength, not its social characteristics; indeed, it suggests we think of the middle class not as especially virtuous but as usually selfish.

From the very excellent "Watching the English" by Kate Fox, "self-appointed national ethno-shrink." This is pretty old and has been on my to-read list for some time, but I suppose I never got around to it as I had the impression that it seemed a bit frivolous. It is not. Whilst some of it may seem obvious, it is obvious in the same kind of incredibly simple but incredibly powerful way that the theory of supply and demand is obvious, with wide explanatory power. There are all sorts of rules of behaviour which I follow, without ever knowing that I did, or why.

Essential reading for basically everyone who suffers from, is close to someone who suffers, or lives amongst those who suffer from Englishness. Especially those awkward teenagers who have no idea that their social dis-ease is a defining national trait rather than a personal failing (I certainly didn't).

19 November 2011

From Peter Lindert, Growing Public: Social Spending and Economic Growth since the Eighteenth Century (HT: MR)

The same forces will continue to drive global trends in social transfers for the next half-century. Countries’ social transfers, like their commitment to public schooling, will depend mainly on their income growth, their population aging, and the fullness of their democracy. The Robin Hood paradox will continue to hold in the year 2050: The countries that still spend less than 10 percent of GDP on transfers, and little on schools, will be the troubled countries where poverty and inequality call most loudly for such social spending.

Yes, social spending has been internally driven for most countries, but the "robin hood paradox" would suggest to me a potential catalytic role for aid.

17 November 2011

Cash transfers are an increasingly important component of social protection systems in most countries. Usually, cash transfers are evaluated against their effects on poverty or human capital, with their impact on social relations within and between households relegated to discrete comments on ‘stigma’, ‘resentment’ and sharing, including reduction of remittances and other support. Using evidence from Oxford Policy Management's evaluations of cash transfer programmes in Malawi and Zimbabwe, we suggest reconceptualising cash transfers as ongoing processes of intervention in a complex system of social relations. Cash transfer interventions operate through and affect this system at each stage: awareness-raising, targeting, payment, case management and monitoring and evaluation. We conclude that the impact of cash transfers on social relations is large and often negative. We argue that this is intrinsically important for wellbeing, but can also have negative consequences for material aspects of wellbeing, such as livelihoods.

Which sounds to me like it could be construed as a pretty good argument for making transfers universal, perhaps starting like South Africa with support for children, pensions, and disabled people.

On a bit of a tangent - who knows what the lessons are for developing countries from the history of social protection in the West?

15 November 2011

Not gonna lie, it's the first novel I've read in a while, but I'm very much enjoying it. Favourite (but not at all representative) quote so far:

“He became another data point in the American experiment of self-government, an experiment statistically skewed from the outset, because it wasn't the people with sociable genes who fled the crowded Old World for the new continent; it was the people who didn't get along well with others.”

10 November 2011

Amyas Morse, head of the National Audit Office, says "transfers show clear immediate benefits, including reduced hunger and raised incomes [for some of the most impoverished and vulnerable people in developing countries]."

05 November 2011

1. The Public Financial Management Bill, a key piece of foundational legislation governing government expenditure, which has sat in draft form for several years has finally almost been passed by the Legislative Assembly (this is very good news).

2. The government accounts for 2005 and 2006 have finally been audited and presented to the Legislative Assembly, again, really great news (although there is some pretty nasty stuff in the details of the audit, it is important that people are hearing about it).

3. The Minister for Public Service Reform has resigned due to opposition from the rest of the cabinet on her reforms. There is no doubt reform is needed, but perhaps her ambitions for hiring only those with higher qualifications was unrealistic.

Two steps forward and one step back? Altogether, there was a kind of sense before the referendum that the independence was the absolute priority, and everything else would have to wait. A kind of reluctance to rock the boat or present any division for Khartoum to try and exploit. But that after independence things might change. I really hope so.

02 November 2011

Or that was one of the more colourful* claims made by Stephen Peterson in a seminar a couple of weeks ago on his work over 12 years with the Ministry of Finance in Ethiopia. Apparently the war with Eritrea meant all the other international advisers left, leaving him alone to work with the government without the distraction of competing missions from different donors.** He was the only expat in the Ministry of Finance, compared to something like 282 at one point in Kenya.

Ethiopia now has the third best PFM system in Africa, after South Africa and Mauritius.

*Damn you America, for making me have to pause and think about the correct spelling of common words like this**Just to be clear, I'm really not trying to imply that war is in any way a good thing. War is still bad yeah?

01 November 2011

SIXTY PERCENT inflation in South Sudan. That is pretty much crisis levels. Credit to the National Bureau of Statistics for getting the figures out so quickly. This is largely a reflection of how dependent South Sudan is on imports, as poor rains regionally have sent food prices soaring in Kenya and Uganda, and independence has caused disruption to Northern traders and at the border.

Check-points are numerous. There are 4 check-points per 100km or 1 per 25km along the major trade routes in South Sudan.

Payment is widespread. On all except one route surveyed, drivers made a payment at an average of 97% or more of the check-points they stopped at.

Payment is not confined to the international border posts. While the largest payments occur at the international borders, payment on internal routes can be up to 8% of the value of goods transported.

Most individual payments are small. 47% of individual payments were less than 20 SDG and only 4% were more than 500 SDG.

Total payment is significant. For all but two routes surveyed, average payment per 100km exceeds 100 SDG. For more than half the routes surveyed, payment per 100 km exceeds 200 SDG. For 10 of 21 routes surveyed, drivers pay 4% or more of the value of items carried. Even on purely internal routes, drivers pay out up to 8% of the value of items carried.

Many payments are unreceipted. 47% of individual payments made during the survey were unreceipted. 27% of the total payment made during the survey was unreceipted.

Waiting times at check-points are high. Across all routes, waiting time is on average 2 hours 9 minutes per 100km or 65% of driving time.

The most commonly observed officials are police and traffic police, sighted at more than 50% of check-points respectively. In many cases, more than one type of official is present at a check-point.

The potential gains are large, but you also risk losing your social network, which is critical when there are inadequate government social safety nets and inadequate private insurance markets (Kaivan Munshi and Mark Rosenzweig).

So - development as a process of transforming small, inefficient, but personal networks of connections to much broader nation-wide government- and market-coordinated networks - less personal (I haven't necessarily met the people helping me out when I'm in need, or those I might be helping out) - but more efficient due to the larger scale and the greater allowance for mobility. Development as the atomisation and individualisation of society. Something to be happy about? Similar to how folks moan about Facebook destroying strong ties and replacing them with abundant weak ties, as they continue to dive headfirst into the internet.

24 October 2011

The Great BBC series African Dreamprofiles entrepreneur Moses Nderitu, who went from being a TV producer to setting up Kenya's first portable toilet rental business almost by accident. He needed to buy a portaloo, but couldn't just ship 1 to Kenya, so had to ship 4. And then slowly started persuading people to rent them from him. And now employs 20 staff in his booming loo rental business.

Which is a lovely illustration of Hidalgo and Hausman's product space theory of economic development. The economy is a bit evolutionary, with lots of random leaps, but some products (and services) are closer together, and so it only takes a small leap (like Nderitu's). Some are much further apart. So the things that an economy can produce tomorrow depend a lot on what you can produce today (learning by doing and path dependence are not new ideas in development economics, but this is a sophisticated new data-driven way of looking at it).

think of the product space as a forest, goods as trees, and entrepreneurs as monkeys. Countries develop as monkeys jump from tree to tree. Trees further away are harder to jump to. Some parts of the forest are denser than others. What trees you have monkeys on today determines where your monkeys will be tomorrow. And it goes from there.

World population is expected to hit 7 billion people this month. So are we running out of space? Not if we all move to cities. This chart from Paul Romer's TED talk represents the space that the world's 3 billion city dwellers take up of all the arable land on the planet. It's 3%.

20 October 2011

"When a new government comes into power, especially an inexperienced one, there's one phenomenon that never fails: every crook on Earth shows up. And every crook on Earth has the biggest promises, has access to billions of dollars of lines of credits, of loans."

I managed to miss this a couple of months ago*; Paul Collier proposed at an ODI meeting that Budget Support should be given according to a simple decision rule, based upon an independent assessment of country public financial management (PFM).

Mick Foster's response is very interesting, arguing that "It is about managing an aid relationship, not certifying PFM and turning on auto-pilot ... Aid donors are the right people to do this – not agents who don’t have to live with the consequences of their verdicts."

I do like the principal that decisions be made objectively according to a transparent rule, but it is easy to imagine problems. A donor could easily be embarrassed by a democratically elected recipient government with good PFM systems deciding to make spending decisions which look somewhat inappropriate to a British taxpayer. But then that is the whole point of budget support - ceding control over spending decisions to a recipient government which is accountable to local people. Which could get tricky if local people hold values which might be different to the donors' (e.g., "The British government says it will cut aid to African countries that persecute LGBT people").

Foster argues that the economic case for budget support is clear, providing "the most cost effective way to deliver services, including allowing for leakages," which contrasts with the perspective of politicians who are "absolutists, not a penny can be stolen, clearly unrealistic." The trouble is, our politicians are also democratically accountable. To an electorate which is also pretty absolutist about corruption. And kind of understandably so. Being stolen from generates an emotional response.**

Imagine you want to give £100 to a Kenyan family. Would you rather spend £25 of that on legitimate administration expenses and have £75 go to the family, or have £80 get through to the family, only £10 spent on administration, and £10 stolen by a politician and spent on his new Mercedes Benz? We know from a large literature on psychological experimental games that individuals often value procedural "fairness" above monetary gain. People can choose inferior outcomes when they think that they are getting stiffed. Does this extrapolate to aid? I can certainly understand both a rational economic acknowledgement that corruption often isn't the main issue, alongside a kind of emotional moral revulsion which makes me want to absolutist.

If the economic case really is so strong compared to the political constraints, how can supporters of budget support make it more effectively?

*Thanks for the reference to Stephen Peterson at a recent Oxford Seminar.**And as an aside, it's interesting that proponents of budget support argue that the economic case needs to trump the political one in this case, when they are often the kind of folks who criticise economists for focusing only on the economic case with scant regard to political constraints.

Médecins Sans Frontières (MSF) (Doctors Without Borders) sadly witnessed this premature assumption in 2009. The overwhelming majority of international funding was directed at development and provision of basic services in support of the state — to the detriment of emergency preparedness and of civilian populations at a time when violence was resurgent. While the international community recognises the new start for South Sudan, aid is not only about state-building — it cannot lose sight of the humanitarian reality on the ground that maynot be as rosy as the projected political future.

So far in 2011 nearly 3,000 people have been killed due to violence in South Sudan and around 300,000 displaced, giving a hollow ring to the idea that South Sudan is now ‘post-conflict.’

14 October 2011

"In the absence of actual data (such as an official census), NGO staff make a back-of-envelope estimate in order to plan their projects; a postgraduate visiting the NGO staff tweaks that estimate for his thesis research; a journalist interviews the researcher and includes the estimate in a newspaper article; a UN officer reads the article and copies the estimate into her report; a television station picks up the report and the estimate becomes the headline; NGO staff see the television report and update their original estimate accordingly." (source: www.humanitarian.info) (via Map Kibera Project)

I honestly had no idea that Kibera is less than 200,000 people, and not over a million, despite the Kenyan census establishing this fact taking place 2 years ago. Via the Africa Research Institute

13 October 2011

Seen in this light, the “massive turnout” that the newspapers are reporting this morning starts to seem disenchanting. To the extent that turnout is driven by campaign promises, more voters may mean more disillusionment and less communal collective action down the line.

11 October 2011

...is defined by the 2010 Child Poverty Act. According to the IFS report just out,

The Act defines an individual to be in relative poverty if his or her household’s equivalised income is below 60% of the median in that year; and he or she is in absolute poverty if the household’s equivalised income is below 60% of the 2010---11 median income, adjusted for inflation.

So by "absolute poverty" we are still actually talking about inequality. Now, I care very deeply about inequality, and in particular inequality in life chances (i.e. starting points rather than outcomes).

But I just can't decide whether I should be irritated by imprecise and misleading language about poverty, or impressed by the re-branding of inequality (which is clearly something only loony socialists should care about) as child poverty (who wouldn't care about child poverty? Surely only a heartless monster. Even Conservatives should care about child poverty).

So points for clever marketing. But do we really want people to think for a second that the absolute poverty of living on £23.50 a day in the UK is in any way comparable to the absolute poverty of the billion or so people worldwide who live on less than 80 pence a day?

07 October 2011

My new employers Oxford Policy Management have just published an interesting new opinion piece by Alex Matheson looking at the failure of capacity-building.

A 2006 Australian report ‘Capacity Building Evaluation’ states that the development community spends $15 billion annually on capacity development but is “unsure” of the return on its investment. In 2008, the World Bank concluded that no more than half of the $720m it spends on training each year actually resulted in enhanced capacity.

That bears repeating – less than half of World Bank spending on training actually does anything.

So why does this continue? Matheson explains how both donors and recipient governments have every incentive to carry on with the status quo and not rock the boat. For the recipients, well who doesn’t like an excuse to get out of the office for a few days of training? And for donors, it’s a nice clean easy way to spend some money, which may well have at least some short-term superficial outputs.

What is typically though needed in dysfunctional organizations is not more inputs into a bad organizational system, but the much more challenging job of managerial and organizational reform.

The first quick win is to be clear on terminology.

Training ≠ capacity development.

The two are not synonymous (technical training for individuals can of course be very useful, we should just be clear that it is not going to create effective organizations, meaning the working relationships between individuals).

Finally Matheson offers up some more substantive solutions;

Making a prior political economy assessment of the barriers to capacity development and the prospects for building conditions for successful partnership.

Not engaging unless the leadership group in the organisation is committed to the goals and is willing to allow space for change.

Designing interventions that take account of the political and economic environment. For instance, organisational change strategies in civil services in South Asia must take into account the power and influence of cross-departmental cadres, and the strong bonds between batch-mates.

Designing support programmes that allow enough time for new capacities to be institutionalised and are sufficiently flexible to survive political inattention, senior staff turnover, and periodic distractions. Important elements of this are establishing inclusive networks and engaging on a wide front to allow for changing partners and temporary reversals.

Promoting a process of change that allows time and opportunity for confidence building through small successes amongst the leadership team, before addressing major challenges.

Adopting a patient but persistent approach that keeps long-term behavioural goals in mind, exploits windows of opportunity, avoids unnecessary confrontations and focuses on results rather than publicising a badged reform.

04 October 2011

As workers leave the countryside in the hope of better pay, the communities they leave behind face increasing poverty

...

Wang Fang and her husband, Chen Shuangfu, arrived in the provincial capital, Guiyang, 10 years ago, with just 10 yuan in their pockets. Their hard, unappealing work – collecting and sorting rubbish for recycling – earns them as much as 20,000 yuan a year, compared with their 1,000 yuan income back home. But their rural hukou means they are not entitled to many services – and, since the hukou is inherited, neither are their sons. (The Guardian)

So, a couple living in rural poverty increase their income by a factor of TWENTY, from about £100 a year (at market exchange rates) to £2,000 a year, JUST BY MOVING TO THE PROVINCIAL CAPITAL, and you still want to find GRIPES!? Are you INSANE? Totally innumerate?!! Or know of some other secret government policy that nobody else has heard of that can increase the incomes of those living in rural poverty by MORE than 2000%?!! Get a grip!

Not for a second to deny that there are challenges to be overcome in the process of urbanisation. But writing long miserable articles about the woes of rural poverty without for a second stopping to celebrate the absolute wondrous miracle that is overnight 2000% pay increases for the poor, is insane. I would sort rubbish for recycling in a hovel for a 2000% pay raise. Wouldn't you?

That is the real story here. Not the fact that some poor rural people are still poor and rural.

28 September 2011

With apologies to all of the wonderful people who work in ICT4D, but is it possible that actually new technologies aren't all that important, but we focus on them because they are so important to our lives, because it gives us a sense of optimism and hope, and because we like new shiny things? If my amateur psychologising is correct, this is a version of the availability bias.

Essentially the availability heuristic operates on the notion that "if you can think of it, it must be important."

And because we spend all day on our macs and ipads, well surely these things must be able to revolutionise poor countries too right? And not only that, but the idea empowers us to think that we are able to make a difference.

I have a couple of hesitations.

1. One of the chief functions of modern technology is as labour-saving device. Wages are high, so cutting out a worker can really save money. That's why we have to scan our own shopping in the supermarket these days. Well guess what, in most developing countries, wages are not high. That is kinda the definition of developing country. So, the labour-saving device isn't quite so relevant. (I'm thinking of this JPAL project in India. Computer-assisted learning works, but person-assisted learning is more cost-effective).

2. There are already a TON of amazing technologies we already know about that just aren't being used. Fertilizer, vaccines, bednets, chlorine tablets for drinking water. The challenge is getting existing technologies to scale.

I know mobile phones are cool and important. But maybe the really important technologies are the hardest ones. Getting democracy and the rule of law to work. And those are technologies that we really don't know how to transplant to new places.

Michael Clemens made a really great analogy on the CGD wonkcast between research on migration and research on the entry of women into the labor force:

Suppose that I was a labor economist studying the entry of
women into the labor force, and most of the papers I wrote were trying to
document is this a good thing.

Well, first of all, are they giving enough money to their
husbands? What are their husbands really doing with it? Are they buying alcohol
or not?

And second, what about the loss to their kids, and the
terrible effects that fewer of them are being teachers and nurses any more.
What’s happening to the kids in the schoolroom?

All concerns that are not crazy, that could be thought of as
legitimate. But if there is very little research on the gains to women, the fact that women are now investment bankers
and presidents, things that weren’t thinkable before they entered the labor
force. If we really weren’t studying those things at all, or if they were
thought to be uninteresting, what would that say about our underlying
conception of the world?

The analogy to development is that I really think people in
development are much too focused on developing countries rather than developing people.

27 September 2011

Marco Manacorda, Ed Miguel, and Andrea Vigorito put a working paper out a couple of years ago showing a relationship between receipt of a Uruguayan government cash transfer scheme, and political support for the governing party. Which pretty much makes sense.

we find that beneficiary households are 21 to 28 percentage points more likely to favor the current government (relative to the previous government) ...

Back-of-the envelope calculations suggest that securing one extra supporter costs the government on the order of US$2,000 per year, or one third of national GDP per capita (though this estimate is an upper bound cost if political impacts persist after the program has ended).

Which is fine. Government-funded social protection buys political support.

So what does aid-financed social protection buy? Does it depend on who delivers the program? Hopefully GiveDirectly.org can work this into their RCT.

26 September 2011

So in 2005 all the big donor countries set themselves a bunch of targets for making their aid more effective. The results are in.

"The results of the 2011 Survey on Monitoring the Paris Declaration are sobering. At the global level, only 1 out of the 13 targets established for 2010 has been met. Nonetheless, it is important to note that considerable progress has been made towards many of the remaining 12 targets."

"If developing countries had hit as few targets as the donors have met on the Paris Declaration we would have cut off their aid."

And to paraphrase Owen, this is all sadly a bit predictable. The targets are inconsistent with the incentives facing donor agencies. We need new ways of working, including much more transparency and better data (for more - see here).

21 September 2011

Relaxing Britain’s planning rules will be good for growth, for the environment, and for social mobility.

The countryside lobby is selling a straw man. Developers generally don’t want to concrete over our beautiful rural countryside just for the sake of it. There is little value in building in the middle of nowhere. The most valuable place to build new commercial and residential properties is where prices are high – the wealthy and productive South-East – areas that are already developed. By increasing housing density in the South-East, we can allow more people to move there. More dense urban areas are more productive, as scale allows for greater economic diversity, and for new ideas to be freely shared.

New building will also bring down prices, allowing poorer people to live in productive areas. If we are serious about social mobility, we need to allow poor households the opportunity to live close to jobs in high productivity parts of the country (and without expensive government subsidies).

Finally, dense urban areas are better for the environment than small countryside towns, because in urban areas people walk, cycle, or take public transport rather than drive everywhere.

For once, this is a genuinely progressive policy from the Tories. The left should embrace it.

Sadly economic geography is tragically misunderstood by the public. But there is a pretty much a consensus from economists on this issue. Two great recent books by Ed Glaeser at Harvard and Ryan Avent of The Economist make the case for less planning regulation in the US. Henry Overman, Director of the Spatial Economics Research Centre at the LSE, argues that the changes in the UK do not go far enough.

Oxford

How about a specific example for clarity? This is Oxford. The whole area to the South East of Oxford is pretty built up, from Cowley Road down to Blackbird Leys. Binsey, on the other hand, less than a mile North West of the train station (which gets you to London in 50 minutes), has a population of, er, 28 (at least it did in 2001).

I love the countryside. I really do. But the average value of rural land in Oxfordshire is £21k per ha. The average value of suburban land on the edge of Oxford is £4,000,000 per ha. It is utter madness to not build on Binsey.

Would it really be so bad if we let some towns and cities like Oxford expand? Isn't there a bit of space left in Oxfordshire besides the thick ring around the town?

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Update:

Yeah...... so Cynan in the comments posted the link to this Oxford flood plain map. Perhaps Binsey wasn't the best example in the world. And yet.... Christchurch still wanted to build there, presumably knowing about the flood plain. And.... Amsterdam? Or rather, the 25% of the entire Netherlands which is below sea level?

20 September 2011

"academics, funded mostly by the public purse, pay for the production and dissemination of academic papers; but for historical reasons, these are published by private organisations who charge around $30 per academic paper, keeping out any reader who doesn’t have access through their institution."(Goldacre, on Monbiot)

It's hard to judge exactly how many people are likely to be affected, but I would bet that there are thousands of people out there who are able to read research, who work in some kind of operational decision-making role, and who might, on occasion, want to do a quick google search and skim the latest relevant academic paper on an issue.

Policy notes and summaries produced by think tanks are fine, but they are costly to produce, and rarely answer the precise specific question that a decision-maker is looking at. There is a parallel here to Owen Barder's arguments about aid transparency - information should be first be made free at source, and we can worry about analysis and presentation later (or rather the market, and enthusiastic amateurs, can).

Even in large institutions it can be difficult - the British Department for Work and Pensions is the largest employer of professional economists in the country - and it does pay for some kind of access, but I do remember it being not quite as easy as from within a university, and wasting time looking for things. Good luck being a US-educated returnee to the civil service in South Sudan.

19 September 2011

Probably not. And it probably doesn't matter, because the moral case based on evidence of effectiveness in alleviating poverty (and lack of evidence, as far as I am aware, that cash blunts work incentives), should be powerful enough.

But for those who don't dig the whole equity thing, Stefan Dercon has a new paper proposing how social protection could contribute more to overall economic efficiency and growth.

Social protection focusing on children, especially before the
age of five (there are large documented life-time earnings/productivity gains for healthier and better nourished young children)

Social protection measures to make migration smoother and
cities more attractive places to live for low skilled workers, possibly via urban
workfare schemes focusing on urban community asset building (cities are engines of growth. A promising similar idea being tested by Mushfiq Mobarak is providing an insurance policy for migrants - a free return bus pass)

Social protection targeted at adolescents and young adults,
including transfers conditional on training focused on urban labour market transitions (something to tackle all that youth unemployment).

13 September 2011

Dilip Ratha and Sonia Plaza have a nice article in Finance & Development recommending a number of concrete actions for developing countries, the standouts for me being;

developing networks - there is a key role for embassies to play here, who could be doing a much better job at connecting with and engaging their diaspora (can they learn something from university alumni offices?)

allowing dual citizenship (make coming and going as easy as possible, and people will come more often - currently "only 21 of Africa’s 54 countries allow dual citizenship")

diaspora bonds (giving diaspora the opportunity to save their money by lending to the government and thus investing in their home country)

07 September 2011

A friend asked me to blog this paper so he doesn't have to read it. So I'm going for a little-known time-saving technique called "read the conclusion and tables";

Development programs create incentives whether we like it or not. Recent attention to using incentives in the service of development creates an opportunity to make these incentives explicit and improve their designs. This process will go faster if we take advantage of the extensive literature on how individuals, organizations, and countries respond to incentives and think carefully about designs that are appropriate to the context and problem. At the same time, we shouldn’t fool ourselves into believing that there are perfect designs. Instead, by recognizing the complexities, we can design programs that are promising, that avoid known pitfalls, and then evaluate, learn, and adapt from the experience.

06 September 2011

"I always say to the leaders that I interact with, if you show me a priority list with 50 things I promise you, you will do nothing. If you show me a list with 5 things, you can do it. And you've got to decide which of those things are really important." (at 19 minutes)

Which leads me to the new priorities for government and donors in South Sudan made by a coalition of NGOs;

03 September 2011

I volunteered in Kampala in the summer of 2006, and to save money stayed in the mostly empty student halls at Makerere University. I thought I would drop in at the library, and was pretty shocked to find almost no books that looked like they had been published since 1980.

Universities will train the next generation of Presidents, bureaucrats, generals and business leaders.

You want industry? Institutions? Accountability? Technological diffusion? Peace? Time for donors to rethink education spending policies in a big way.

Those are some pretty big claims. In a different context, Clemens argues that actually we are lacking solid evidence on the social benefits from higher education;

A broad theoretical literature posits that human capital externalities shape the development of poor countries (for example, Romer, 1990; Kremer, 1993; Lucas, 1988). If positive human capital externalities are real and large, it is possible that the depletion of human capital stock via emigration inflicts negative externalities on nonmigrants. However, these externalities have proven difficult to observe, their theoretical basis remains unclear, and their use to justify policy remains shaky.

I feel that higher education is probably a high risk high reward investment for the public sector. Most graduates probably won't produce large social benefits, but the few that do could well justify the expense. And this pattern of high impact outliers make this a difficult cost-benefit calculation to do.

As my co-authors and I try to show in our paper, the problem is caused at least as much by the presumption that higher education should be financed and provided by the government (essentially free of charge), which has led to elite capture and politicization of the system.

The US and UK together have only 5.4 percent of the world’s population and yet have over half the world’s top universities—ten times their population share—and almost three times as many top universities as all of continental Europe combined. Why?

So there is probably scope for some technical assistance in thinking about the higher ed ecosystem in developing countries.

But should we provide direct subsidies? How do we trade off investment in primary education, which is probably more directly and immediately pro-poor, vs the long-term speculative investment in higher education?

Is apparently going to be at Ramciel, which will be renamed "John Garang City."

Report trickling out of Juba has it that the council of ministers, today, have officially approved the relocation of the present capital city of the Republic of South Sudan from Juba to Ramciel (say Rham-chieel).

In another interesting twist to this breaking news, Ramciel itself has been officially renamed as John Garang in honor of the SPLM/A founding leader and the current tentative founding father of the state of South Sudan.

02 September 2011

There has been massive success in putting butts in seats—enrollments and grade completion have expanded massively around the globe—even in very poor countries. However, the accumulating evidence from around the globe is that this has not lead to nearly the degree of learning as had been hoped. Students show very little mastery of even the basics, much less the ability to go beyond the rote and actually understand concepts, much much less the ability to use their conceptual mastery applied to novel practical problems, much much much less for even having laid the foundation for “new basic skills” that are not substitutes for, but meant to build off of, the old basic skills.

So what to do? Pritchett then looks at the evidence on returns to educational "inputs" - books, uniforms, teachers, and compares what massive increases in inputs would do, compared to the kind of improvements needed. (The benchmark is one student standard deviation (SSD)).

So inputs don't work either.

--------

Update: I forgot to add this Freakonomics link to a new study finding that providing school uniforms in the US improves attendance, but not grades.

31 August 2011

Ranil makes some valid criticisms of my (over?) enthusiasm for new and shiny forms of aid.

Notably, that COD does not dispense with conditionality, just shifts it from process to results. I would still argue that this form of aid is potentially more respectful than process conditionality. It is more transparent and more upfront about the conditionality. There is even an explicit contract involved, rather than arbitrary judgement calls on eligibility (Malawi?).

Furthermore, the taxpayer audience point is a really important one here - COD wins hands down. Budget support will never be able to satisfy rich country taxpayers that there is no waste or corruption going on. Many people think that their own government wastes much of their money, never mind a foreign government with no accountability to them.

Nonetheless, this is an unproven technology, which clearly shouldn't just replace all traditional aid. But I do see it as an evolution.

I am more optimistic about cash transfers. Basically, I just don't see how there is any scope for mis-spending money which goes directly to someone who earns less than $1.50 a day. As long as we are confident that they do indeed get the money, I don't even see the need for an impact assessment. They just get the money that they were desperately short of.

Giving money to the poorest could tautologically eradicate income poverty. And if it is technically feasible and affordable, which it kind of is, I basically think we should just do it already, regardless of concerns about long-term constraints to national economic development, or access to education, health, security, and other public goods. I'm still not sure if Charles Kenny meant his $100 billion as a serious proposal, but why the hell not? It's really just peanuts in the grand scheme of things.

And I don't think we should be afraid of permanent handouts. We don't talk about exit strategies to redistribution within the UK. In Owen's words;

the richest people in the world have a duty to support the poorest people in the world – whether they are in the same country or not – as a matter of social justice rather than charity. This is a principle that we accept within our own countries – few of us think that we should aim to exit altogether from national insurance, state pensions or unemployment benefits in our own countries. The same principle should apply globally: there will always be people who are relatively rich and people who are relatively poor, and we should be aiming to evolve institutions which are effective at transferring income from the best off to the wost off around the world. And we will be doing that for the foreseeable future.

It sounds radical, but its really just some pretty old school liberal philosophy. Free markets are fine as long as everyone gets a fair shot, and you don't get a fair shot when you are born into extreme poverty. So as a matter of ethics there should be transfers from the richest to the poorest, for them to provide enough for their children to eat. No child should go hungry just because their parents don't earn enough.

And the evidence? How about Brazil lifting 20 million people out of poverty in just six years through Bolsa Familia? Has there ever been a better anti-poverty program?

30 August 2011

Budget support should not be allowed to fall off the agenda. Developing country finance ministers would miss it ... So would development practitioners ... Budget support ... delivers at scale, empowers developing country Governments, reduces transactions costs, and increases accountability.

All of which is true. But also makes the most sense when you are comparing it with "old" aid. Aid projects designed to replace government functions. Budget support is an improvement on these parallel systems, and a better form of government-to-government aid, in large part because it is built on respect for the recipients.

But is the best possible form of aid? I think that two new forms of aid can do better.

Cash-on-delivery is a close relative of budget support, but it does even more for empowerment and respect, as it manages to do away with all the process conditionality required for budget support, by paying only for results. No need to worry about PFM systems. Either the government delivers for its people, or it doesn't, no need for us tell them how to do it.

Cash transfers to individuals goes one step further from respect and empowerment for developing country governments, to respect and empowerment for poor individuals. It seem so obvious, when our goal is to make poor people less poor, to just give them the cash, especially when it is feasible at low overheads (see GiveDirectly) and globally affordable (see Charles Kenny).

Kenny estimates that $100 billion a year in cash transfers to individuals could eradicate extreme poverty.

There are about 1 billion people living in the rich world. So for just one hundred dollars a year each we could eradicate extreme poverty.

What particularly caught my interest is Julian Gough's trust-based online publishing model. You get the book for free, and he asks for a tip once you've read it, if you enjoyed it. Now before you all say "that's what Radiohead did with In Rainbows," NO IT IS NOT. Radiohead asked for payment up front. Gough wants it after. That means all the risk is on him, not you. How on earth are you supposed to know how much you think the thing is worth before you've listened to it / read it?

Or in Gough's publisher's words:

we're aware of a bigger threat than piracy – oblivion. It is not easy, in this cash- and time-poor age, with free forms of entertainment abounding, to persuade people to spend money on an unknown book. Yes, a great book affords many hours of enjoyment and enrichment; indeed, adorns the shelves and the mind for a lifetime. Thus valued (i.e. using the crude calculus of 'hours of enjoyment and enrichment afforded'), a great book ought to cost far more than, say, a ticket to the cinema or the opera. But it doesn't, and among the reasons for this is the fact that a book – particularly a new, unproven book – comes with a grave risk: that, far from the hoped-for intellectual, moral, emotional and spiritual nourishment, it will bring nothing but asphyxiating boredom and hair-yanking irritation – with the pain only prolonged by that dreadful duty to finish felt by so many readers. And, of course, the worse a book is, the longer it takes to get through. What if you were unlucky enough to pick up an infinitely bad book? It would take all eternity to read it. Films and operas are different: the potential rewards may be less, but so are the risks. They're over in an hour or two, and even if they've bored or annoyed the pants off you, at least they've got you out of the house.

All of which is timely given a recent lecture by author Ewan Morrison lamenting that;

within 25 years the digital revolution will bring about the end of paper books. But more importantly, ebooks and e-publishing will mean the end of "the writer" as a profession. Ebooks, in the future, will be written by first-timers, by teams, by speciality subject enthusiasts and by those who were already established in the era of the paper book. The digital revolution will not emancipate writers or open up a new era of creativity, it will mean that writers offer up their work for next to nothing or for free. Writing, as a profession, will cease to exist.

Now back to those three books. One of these authors is not like the others. He is an academic, with a salary from an institution for teaching, research and writing. His salary, and his ability to write books, does not rely directly upon those books making a profit.

Can we learn from academia and build new institutions to support artists in the new era of free online publishing?

I think that Morrison's diagnosis and analysis of the falling price of online content is correct, but I am far more optimistic that we can create new funding models to support music and literature. I hope I am right.

27 August 2011

"I wrote 'Ouvrez Les Frontières' ("open the borders") to make clear that no matter what is going on in Africa, Africans should have the right to travel just like Europeans or Americans do. It's a question of human rights."

I just made a donation to Give Directly. Given how much I have ranted about how great I think cash transfers are, it would be kind of rude not to.

I know it is very undignified and un-British of me to boast, but I believe in the power of social proof, and so I am going to do it anyway on the off chance that just one more person might be guilted into thinking about their own giving.

Besides all of that, I wanted to share this wonderful thank you message:

We will transfer your donation electronically to an impoverished household in Kenya. Your choice will give them choices: to pay school fees, buy food, get medical help, or repair their home, among others.

Your donation is also a vote for a new vision of philanthropy - a vision that puts recipients in the driver's seat. Help us share that vision with your friends and family. Talk with them about what philanthropy could become and, if they're intrigued, send them our way. We'll be working to create the most efficient, transparent, and respectful way to give.

Justin Wolfers on why having children may not make you happy and the shortcomings of happiness-targeting policies:

When I ask other people who would say their kids had made them always happy, they’d say they’d still have kids and the reason is they get meaning from them. Or some deeper sense of something or other. And so it turns out there’s more to life than happiness. That’s actually really important because if you go back and think about these happiness debates, people are saying politicians should target happiness. Well if we really believed that, the first thing we should do is have mass sterilization policies. Now it turns out that that’s an absurd suggestion. And it’s absurd because there’s a whole bunch of other things we also care about. Now what that suggests is not that the happiness project is– is wrong and needs to stop, but it suggests that it needs to expand and start to take account of these other things. These crazy things that make us do things like go out and have kids.

21 August 2011

For the elimination of trade policy barriers and capital barriers, the estimated gains amount to less than a few percent of world GDP. For labor mobility barriers, the estimated gains are often in the range of 50–150 percent of world GDP.

Cameron is attacking human rights legislation and setting up a national citizens service because of generalized moral decline. Blair points out that this is not a problem of society at large, but a specific excluded class.

The Economist has some smart analysis, but their prescriptions; better vocational education and more youth workers - are pretty superficial.

The only way to get rid of deep divisions is deep integration. That means mixed schools. And here's the thing - the evidence shows that smart kids thrive in any environment, so middle-class parents can relax.

19 August 2011

Tim Besley and co-authors have extended the brilliant (if morbid) Jones-Olken paper which estimates the impact of national leaders on economic growth, to consider the impact of education upon leadership performance.

"On average," they write, "the departure of an educated leader" -- a leader with a postgraduate education, like a Ph.D or law degree -- "leads to a 0.713 percentage point reduction in growth. This contrasts with the reduction of just 0.05 percentage points after the death of a leader who does not have a post-graduate qualification." It appears that the more educated leaders were doing something right before they were suddenly removed from office -- and that replacing them with less-educated leaders resulted, on some level, in less effective policy. There's a reverse effect as well: when comparatively less-educated leaders die, their replacements are statistically likely to be more educated, and so growth tends to increase after those transitions.

If you believe these numbers, then that is a large effect, and possibly a boon to brain gain/brain circulation arguments regarding migration given the number of African Presidents with advanced education from Europe and America?

Then again, given the robust correlation between penis length and economic growth, we probably shouldn't be putting too much faith in this kind of cross-country empirical work.

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"Because the consequences for human welfare involved in questions like these are simply staggering: Once one starts to think about them, it is hard to think about anything else." (Lucas 1988, On the Mechanics of Economic Development)

"The philosophers have hitherto only interpreted the world in various ways; the point however is to change it" (Marx 1888)

Roving Bandit is a reference to Mancur Olson, not because I think I'm some kind of badass.

"represent the material embodiment of market discourses that run through the capillary structures of orgs that conform contemporary neoliberal ed policy" -- Education International